REPORT ON CORPORATE GOVERNANCE

Transcription

1 REPORT ON CORPORATE GOVERNANCE COMPANY S PHILOSOPHY ON CORPORATE GOVERNANCE As a Tata Company, the Company s philosophy on Corporate Governance is founded upon a rich legacy of fair, ethical and transparent governance practices, many of which were in place even before they were mandated by adopting the highest standards of professionalism, honesty, integrity and ethical behavior. As a global organization, the Corporate Governance practices followed by the Company and its subsidiaries are compatible with international standards and best practices. Through the Governance mechanism in the Company, the Board along with its Committees undertakes its fiduciary responsibilities to all its stakeholders by ensuring transparency, fairplay and independence in its decision making. The Corporate Governance philosophy is further strengthened with the adherence to the Tata Business Excellence Model as a means to drive excellence and the Balanced Scorecard methodology for tracking progress on long term strategic objectives. The Tata Code of Conduct, which articulates the values, ethics and business principles, serves as a guide to the Company, its directors and employees is supplemented with an appropriate mechanism to report any concern pertaining to non-adherence to the said Code. The Company is in full compliance with the requirements of Corporate Governance under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ( SEBI Listing Regulations ). The Company s Depositary Programme is listed on the New York Stock Exchange and the Company also complies with US regulations as applicable to Foreign Private Issuers (non-us companies listed on US Exchange) which cast upon the Board of Directors and the Audit Committee, onerous responsibilities to improve the Company s operating efficiencies. Risk management and the internal control process focus areas, continue to meet the progressive governance standards. The Company has adopted Governance Guidelines on Board Effectiveness based on current and emerging best practices from both within and outside the Tata Group of companies. BOARD OF DIRECTORS The Board of Directors along with its Committees provide leadership and guidance to the Company s management as also direct, supervise and control the performance of the Company. The Board currently comprises of 10 Directors out of which 7 Directors (70%) are Non-Executive Directors. As at March 31, 2017 the Company has a Non-Executive Chairman and 4 Independent Directors consequent to the retirement of Mr Subodh Bhargava, an Independent Director on March 29, The Company appointed Mr Om Prakash Bhatt on May 9, 2017 and presently the Independent Directors comprise more than half of the total strength of the Board. All the Independent Directors have confirmed that they meet the independence criteria as mentioned under Regulation 16(1)(b) of the SEBI Listing Regulations and Section 149 of the Companies Act, 2013 ( Act ). All the Directors have made necessary disclosures regarding their directorships as required under Section 184 of the Act and on the Committee positions held by them in other companies. None of the Directors on the Company s Board hold the office of Director in more than 20 companies, including 10 public companies and none of the Directors of the Company are related to each other. In accordance with Regulation 26 of the SEBI Listing Regulations none of the Directors are members in more than 10 committees or act as chairperson of more than 5 committees [the committees being, Audit Committee and Stakeholders Relationship Committee] across all listed entities in which he/she is a Director. All Non-Executive, Non Independent Directors, are liable to retire by rotation. The appointment of the Managing Director and Executive Directors, including the tenure and terms of remuneration are also approved by the members at the first meeting after the said appointment. The required information, including information as enumerated in Regulation 17(7) read together with Part A of Schedule II of the SEBI Listing Regulations is made available to the Board of Directors, for discussions and consideration at Board Meetings. The Board reviews the declaration made by the CEO & Managing Director and the Group Chief Financial Officer ( CFO ) regarding compliance with all applicable laws on a quarterly basis, as also steps taken to remediate instances of non-compliance, if any. Pursuant to Regulation 27(2) of the SEBI Listing Regulations, the Company also submits a quarterly compliance report on Corporate Governance to the Indian Stock Exchanges including details on all material transactions with related parties, within 15 days from the close of every quarter. The CEO & Managing Director and the CFO have certified to the Board on inter alia, the accuracy of the financial statements and adequacy of internal controls for financial reporting, in accordance with Regulation 17(8) read together with Part B of Schedule II of the SEBI Listing Regulations, pertaining to CEO and CFO certification for the Financial Year ended March 31, During the year under review, 10 Board Meetings were held on May 30, 2016, August 6, 2016, August 26, 2016, October 5, 2016, November 14, 2016 November 23, 2016, December 12, 2016, January 24, 2017, February 14, 2017 and March 30, The maximum timegap between any two consecutive meetings did not exceed 120 days. All the agenda papers for the Board and Committee meetings are disseminated electronically on a real-time basis, by uploading them on a secured online application, specifically designed for this purpose, thereby eliminating circulation of printed agenda papers. The composition of the Board, attendance at Board Meetings held during the Financial Year under review and at the last Annual General Meeting (AGM), number of directorships (including Tata Motors), memberships/chairmanships of the Board and Committees of public companies and their shareholding as at March 31, 2017 in the Company are as follows: nd Annual Report

2 Notice Board s Report Management Discussion & Analysis Corporate Governance Report Business Responsibility Report Name of the Director Director Identification Number Director Category Mr Cyrus Mistry (3) (4) Non-Executive, Chairman Mr Natarajan Non-Executive, Chandrasekaran (5) Chairman Mr Nusli Wadia (4) (6) Non-Executive, Independent Dr R A Mashelkar Non-Executive, Independent Mr S Bhargava (7) Non-Executive, Independent Mr N Munjee Non-Executive, Independent Mr V K Jairath Non-Executive, Independent Ms Falguni Nayar Non-Executive, Independent Mr Om Prakash Bhatt (9) Non-Executive, Independent No. of Board Meetings attended in the year Attendance (%) Attendance at the last AGM Directorships (1) Committee positions (2) Chairman Member Chairman Member Holding in shares and other convertible instruments Yes ,855 Ordinary Shares NA Yes ,000 Ordinary Shares 9 90 Yes Yes (8) 90 Yes Yes Yes NA NA NA Dr Ralf Speth Non-Executive Yes Mr Guenter Butschek CEO and Managing Director Mr Ravindra Pisharody Executive Director (Commercial Vehicles) Mr Satish B Borwankar Executive Director (Quality) 9 (8) 90 Yes Yes Yes Ordinary Shares (1) Excludes Directorships in private companies, foreign companies, Section 8 companies and alternate directorships. (2) Includes only Audit and Stakeholders Relationship Committees. (3) Resigned as the Non-Executive Chairman and Director of the Company with effect from December 19, (4) Number of Directorships, Committee positions and shareholding details are as on the date of cessation as director. (5) Appointed as an Additional Director and Non-Executive Chairman of the Company with effect from January 17, (6) Removed as an Independent Director by the Shareholders at the Extraordinary General Meeting of the Company held on December 22, (7) Retired on March 29, 2017, upon attaining the age of 75 years in accordance with the Company s Governance Guidelines on Board Effectiveness. (8) Excludes 1 meeting attended via audio conference facility. ( 9) Appointed as a Non-Executive Independent Director of the Company with effect from May 9, 2017 and disclosures above are as on date. The Company actively uses the facility of video conferencing permitted under Section 173(2) of the Act read together with Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014, thereby saving resources cost to the Company and valued time of the Directors. Independent Directors Meeting: As per Regulation 25(1) of the SEBI Listing Regulations, none of the Independent Directors serves as Independent Directors in more than 7 listed entities and in case of whole-time directors in any listed entity, then they do not serve as Independent Directors in more than 3 listed entities. During the year 3 Meetings of Independent Directors were held on November 14, 2016, December 12, 2016 and March 30, 2017, the attendance whereat is as follows: Composition Meetings attended Attendance (%) Mr Nusli Wadia (1) Dr R A Mashelkar 2 67 Mr Nasser Munjee 2 (2) 67 Mr Subodh Bhargava (3) Mr Vinesh Kumar Jairath Ms Falguni Nayar (1) Removed as Independent Director by the Shareholders at the Extraordinary General Meeting of the Company held on December 22, (2) Excludes 1 meeting attended via audio conference facility. (3) Retired in accordance with the Company s Governance Guidelines on Board Effectiveness on March 29, 2017, upon attaining the age of 75 years. 171

3 An Independent Directors meeting in accordance with the provisions of Section 149(8) read with Schedule IV of the Act and Regulation 25(3) and 25(4) of the SEBI Listing Regulations was convened on March 30, 2017, to review the performance of the Non-Independent Non-Executive Directors including the Chairman of the Board and performance of the Board as a whole. Board Effectiveness Evaluation: Pursuant to provisions of Regulation 17(10) of the SEBI Listing Regulations and the provisions of the Act, Board evaluation involving evaluation of the Board of Directors, its Committees and individual Directors, including the role of the Board Chairman, was conducted during the year. For details pertaining to the same kindly refer to the Board s Report. Familiarisation Programme: Kindly refer to the Company s website for details of the familiarisation programme for Independent Directors on their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters. COMMITTEES OF THE BOARD The Board has constituted a set of Committees with specific terms of reference/scope to focus effectively on the issues and ensure expedient resolution of diverse matters. The Committees operate as empowered agents of the Board as per their Charter/terms of reference. Targets set / actions directed by them as agreed with the management are reviewed periodically and mid-course corrections are also carried out. The Board of Directors and the Committees also take decisions by circular resolutions which are noted at the next meeting. The minutes of the meetings of all Committees of the Board are placed before the Board for discussions/noting. An Organisation Chart depicting the relationship between the Board of Directors, the Committees and the senior management functions as at March 31, 2017 is illustrated below: CEO & MANAGING DIRECTOR (MD) SHAREHOLDERS BOARD OF DIRECTORS BUSINESS COMMITTEES CV & PV Business Unit Steering Committee# CV & PV Product Review Committee Investment Review Committee# Risk Oversight Committee Sourcing Council# IT Governance Committee EXECUTIVE COMMITTEE - ExCom# Commercial Vehicles (ED) Quality (ED) Passenger Vehicles CTO (Chief Technology Officer) Group Chief Financial Officer Chief Human Resource Officer Chief Purchasing Officer Corporate Strategy and Business Transformation Corporate Communications** BOARD COMMITTEES Audit Committee Executive Committee of the Board Nomination & Remuneration Committee Stakeholders Relationship Committee Safety, Health & Environment Committee Corporate Social Responsibility Committee Risk Management Committee Special Need Based Committees *The CEO & MD chairs the ExCom # Business Committees are chaired by related ExCom member where indicated, otherwise by the CEO & MD OTHER DIRECT REPORTS TO MD Chief Internal Auditor Company Secretary Government Affairs Corporate Legal Chief Information Officer ** associated member of ExCom nd Annual Report

4 Notice Board s Report Management Discussion & Analysis Corporate Governance Report Business Responsibility Report AUDIT COMMITTEE The Audit Committee functions according to its Charter that defines its composition, authority, responsibility and reporting functions in accordance with Section 177 of the Act, Regulation 18(3) read with Part C of Schedule II of the SEBI Listing Regulations and US regulations applicable to the Company and is reviewed from time to time. Whilst, the full Charter is available on the Company s website, given below is a gist of the responsibilities of the Audit Committee: i. Reviewing with the management, quarterly/annual financial statements before submission to the Board, focusing primarily on: ii. Overseeing the Company s financial reporting process and the disclosure of its financial information, including earnings, press release, to ensure that the financial statements are correct, sufficient and credible; Review Reports on the Management Discussion and Analysis of financial condition, results of Operations and the Directors Responsibility Statement; Compliance with accounting standards and changes in accounting policies and practices as well as reasons thereof; Major accounting entries involving estimates based on exercise of judgment by Management; Draft Audit Report, qualifications, if any and significant adjustments arising out of audit; Analysis of the effects of alternative GAAP methods on the financial statements; Compliance with listing and other legal requirements concerning financial statements; Scrutinise inter corporate loans and investments; and Disclosures made under the CEO and CFO certification and related party transactions to the Board and Shareholders. Reviewing with the management, external auditor and internal auditor, adequacy of internal control systems and recommending improvements to the management. iii. Review Management letters/letters of internal control weakness issued by the statutory auditors. iv. Reviewing, with the management, the statement of uses/ application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/ prospectus/ notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, statement of deviations both quarterly and annual, if any, and making appropriate recommendations to the Board to take up steps in this matter. v. Recommending the appointment/removal of the statutory auditor, cost auditor, fixing audit fees, name of Audit firm and approving non-audit/consulting services provided by the statutory auditors firms to the Company and its subsidiaries; evaluating auditors performance, qualifications, experience, independence and pending proceedings relating to professional misconduct, if any. It shall also ensure that the cost auditors are independent, have arm s length relationship and are also not otherwise disqualified at the time of their appointment or during their tenure. vi. vii. Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the chief internal auditor, coverage and frequency of internal audit, appointment, removal, performance and terms of remuneration of the chief internal auditor. Discussing with the internal auditor and senior management, significant internal audit findings and follow-up thereon. viii. Reviewing the findings of any internal investigation by the internal auditor into matters involving suspected fraud or irregularity or a failure of internal control systems of a material nature and report the matter to the Board. ix. Discussing with the statutory auditor before the audit commences, the nature and scope of audit, as well as conduct post-audit discussions to ascertain any area of concern. x. Reviewing the Company s financial controls and risk management systems. xi. xii. xiii. Establish and review the functioning of the Vigil Mechanism under the Whistle-Blower policy of the Company. Reviewing the financial statements and investments made by subsidiary companies and subsidiary oversight relating to areas such as adequacy of the internal audit structure and function of the subsidiaries, their status of audit plan and its execution, key internal audit observations, risk management and the control environment. Look into the reasons for any substantial defaults in payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividend) and creditors, if any. xiv. Reviewing the effectiveness of the system for monitoring compliance with laws and regulations. 173

5 xv. Approving the appointment of CFO after assessing the qualification, experience and background etc. of the candidate. xvi. Engage a registered valuer in case valuations are required in respect of any property, stocks, shares, debentures, securities, goodwill, undertaking or assets, liabilities or net worth of the Company. xvii. Review and suitably reply to the report(s) forwarded by the auditors on the matters where auditors have sufficient reason to believe that an offence involving fraud, is being or has been committed against the Company by officers or employees of the Company. xviii. Review the system of storage, retrieval, display or printout of books of accounts maintained in electronic mode during the required period under law. xix. Approve all or any subsequent modification of transactions with related parties. xx. To approve policies in relation to the implementation of the Tata Code of Conduct for Prevention of Insider Trading and Code of Corporate Disclosure Practices ( Code ) and to supervise implementation of the Code. xxi. To note and take on record the status reports, detailing the dealings by Designated Persons in Securities of the Company, as submitted by the Compliance Officer on a quarterly basis and to provide directions on any penal action to be initiated, in case of any violation of the Code, by any person. During the year, the Committee reviewed key audit findings covering operational, financial and compliance areas. It also reviewed the internal control system in subsidiary companies, status on compliance of its obligations under the Charter and confirmed that it fulfilled its duties and responsibilities. The Committee, through self-assessment, annually evaluates its performance. The Chairman of the Audit Committee briefs the Board members about significant discussions at Audit Committee meetings. The Committee comprises of 4 Independent Directors, all of whom are financially literate and have relevant finance and/or audit exposure. Mr Munjee is the Financial Expert. The quorum of the Committee is two members or one-third of its members, whichever is higher. The Chairman of the Audit Committee also attended the last Annual General Meeting of the Company. During the period under review, 10 Audit Committee meetings were held on April 4, 2016, May 27, 2016, July 8, 2016, August 11, 2016, August 24, 2016, October 4, 2016, November 11, 2016, January 12-13, 2017, February 13, 2017 and March 30, The maximum gap between any two meetings was less than 120 days. Each Audit Committee meeting which considers financial results is preceded by a meeting of the Audit Committee members along with the Auditors only. The composition of the Audit Committee and attendance at its meetings is as follows: Composition Meetings attended Attendance (%) Mr N Munjee (Chairman) Dr R A Mashelkar 9 90 Mr V K Jairath Ms Falguni Nayar 9 90 The Committee meetings are held at the Company s Corporate Headquarters or at its plant locations and are attended by the CEO & Managing Director, Executive Directors, CFO, Company Secretary, Chief Internal Auditor, Statutory Auditors and Cost Auditors on need based basis. The Business and Operation Heads are invited to the meetings, as and when required. The Company Secretary acts as the Secretary of the Audit Committee, as well as all the other Committees of the Company. The Chief Internal Auditor reports directly to the Audit Committee to ensure independence of the Internal Audit function. The Committee relies on the expertise and knowledge of the management, the internal auditors and the Statutory Auditor, in carrying out its oversight responsibilities. It also uses external expertise, if required. The management is responsible for the preparation, presentation and integrity of the Company s financial statements including consolidated statements, accounting and financial reporting principles. The management is also responsible for internal control over financial reporting and all procedures are designed to ensure compliance with accounting standards, applicable laws and regulations as well as for objectively reviewing and evaluating the adequacy, effectiveness and quality of the Company s system of internal controls. Deloitte Haskins & Sells LLP, Mumbai (ICAI Firm Registration No W/W ), the Company s Statutory Auditor, is responsible for performing an independent audit of the Financial Statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in India. NOMINATION AND REMUNERATION COMMITTEE The Nomination and Remuneration Committee (NRC) of the Company functions according to its Charter, that defines its objective, composition, meeting requirements, authority and power, responsibilities, reporting and evaluation functions in accordance with Section 178 of the Act and SEBI Listing Regulations, which are reviewed from time to time. The broad terms of reference of the NRC are as follows: nd Annual Report

6 Notice Board s Report Management Discussion & Analysis Corporate Governance Report Business Responsibility Report Recommend to the Board the set up and composition of the Board and its Committees including the formulation of the criteria for determining qualifications, positive attributes and independence of a director. The Committee periodically reviews the composition of the Board with the objective of achieving an optimum balance of size, skills, independence, knowledge, age, gender and experience. Devise a policy on Board diversity. Recommend to the Board the appointment or reappointment of Directors, including Independent Directors, on the basis of Report on performance evaluation of Independent Directors. Support the board in matters related to set-up, review and refresh of the Committees. Recommend to the Board on voting on resolutions for appointment and remuneration of Directors on the Boards of its material subsidiary companies and provide guidelines for remuneration of Directors on material subsidiaries. Identify and recommend to the Board appointment of Key Managerial Personnel ( KMP as defined by the Act) and executive team members of the Company (as defined by this Committee). The Committee shall consult the Audit Committee before recommending the appointment of the CFO. Carry out evaluation of every Director s performance and support the Board, its Committees and individual Directors, including formulation of criteria for evaluation of Independent Directors and the Board. Oversee the performance review process for the KMP and executive team of the Company with a view that there is an appropriate cascading of goals and targets across the Company and on an annual basis, recommend to the Board the remuneration payable to the Directors, KMP and executive team of the Company. Recommend the Remuneration Policy for Directors, KMP, executive team and other employees. Review matters related to voluntary retirement and early separation schemes for the Company. Oversee familiarization programmes for Directors. Oversee HR philosophy, HR and people strategy and efficacy of HR practices including those for leadership development, rewards and recognition, talent management and succession planning (specifically for the Board, KMP and executive team). Performing such other duties and responsibilities as may be consistent with the provisions of the Committee Charter. The Committee presently comprises of 3 Independent Directors and 1 Non-Executive Director. During the year under review, four meetings of the Committee were held on May 30, 2016, August 12, 2016, November 14, 2016 and March 30, The Board also inducted Mr O P Bhatt, Inependent Director as a Member of the NRC with effect from May 16, The decisions are taken by the Committee, at meetings or by passing circular resolutions. The composition of the Nomination and Remuneration Committee and attendance at its meeting is as follows:. Composition Meetings attended Attendance (%) Mr Nusli Wadia (1) Mr Cyrus Mistry (2) Mr N Chandrasekaran (3) Mr S Bhargava (4) Dr R A Mashelkar 3 75 Mr N Munjee (5) Removed as Independent Director by the Shareholders at the Extraordinary General Meeting of the Company held on December 22, Resigned as the Non-Executive Chairman and Director of the Company with effect from December 19, Appointed as an Additional Director and Non-Executive Chairman of the Company with effect from January 17, Retired in accordance with the Company s Governance Guidelines on Board Effectiveness on March 29, 2017, upon attaining the age of 75 years. 5. Appointed as a Member with effect from March 29, Remuneration Policy The Company has in place a Remuneration Policy for Directors, KMP and other employees, in accordance with the provisions of the Act and the SEBI Listing Regulations. For details on Remuneration Policy for Directors, KMP and other employees, kindly refer to Annexure 4 of the Board s Report. Remuneration of Directors Non-Executive Directors A sitting fee of `60,000/- for attendance at each meeting of the Board, Audit Committee, Executive Committee of the Board, NRC and for Independent Directors Meeting; and `20,000/- for attendance at each meeting of Stakeholders Relationship Committee, Safety, Health & Environment Committee, the Corporate Social Responsibility Committee, Risk Management Committee, Fund Raising Committee and other special need based committees, is paid to its Members (excluding Managing Director and Executive Directors) and also to Directors attending by invitation. The sitting fees paid/payable to the Non Whole-time Directors is excluded whilst calculating the limits of remuneration in accordance with Section 197 of the Act. The Company also reimburses out-of-pocket expenses to Directors attending meetings held at a city other than the one in which the Directors reside. 175

7 The remuneration by way of commission to the Non-Executive Directors is decided by the Board of Directors and distributed to them based on their participation and contribution at the Board and certain Committee meetings as well as time spent on matters other than at meetings. The Members had, at the Annual General Meeting held on August 21, 2013, approved the payment of remuneration by way of commission to the Non Whole-time Directors of the Company, of a sum not exceeding 1% per annum of the net profits of the Company, calculated in accordance with the provisions of the Act for a period of 5 years commencing April 1, 2013, respectively. No Commission was paid to any Non-Executive Director for FY in view of inadequacy of profits. The performance evaluation criteria for Non-Executive Directors, including Independent Directors, is determined by the NRC. An indicative list of factors that were evaluated include participation and contribution by a director, commitment, effective deployment of knowledge and expertise, effective management of relationship with stakeholders, integrity and maintenance of confidentiality and independence of behaviour and judgement. Given below are the Sitting Fees paid/ payable by the Company to Non-Executive Directors during FY : ` in lakhs Name Sitting Fees Mr Cyrus Mistry (1) 6.60 Mr N Chandrasekaran (2) 2.40 Mr N N Wadia (3) 6.60 Dr R A Mashelkar Mr N Munjee Mr S Bhargava (4) 9.00 Mr V K Jairath Ms Falguni Nayar Dr Ralf Speth (5) - Total (1) Resigned as the Non-Executive Chairman and Director of the Company with effect from December 19, (2) Appointed as an Additional Director and Non-Executive Chairman of the Company with effect from January 17, (3) Removed as an Independent Director by the Shareholders at the Extraordinary General Meeting of the Company on December 22, 2016 (4) Retired in accordance with the Company s Governance Guidelines on Board Effectiveness upon attaining 75 years of age on March 29, (5) Dr Ralf Speth is a Non-Executive Director and is not paid any commission or sitting fees for attending Board meetings of the Company in view of his appointment as Chief Executive Officer and Director of Jaguar Land Rover Automotive PLC. Some of the aforementioned Directors are also on the Board of the Company s subsidiaries and associates, in a nonexecutive capacity and are paid remuneration and sitting fees for participating in their meetings. Other than the above, the Non-Executive Directors have no pecuniary relationship or transactions with the Company, its subsidiaries and associates. Managing and Executive Directors The remuneration paid to the CEO & Managing Director and the Executive Directors commensurates with industry standards and Board level positions held in similar sized companies, taking into consideration the individual responsibilities shouldered by them and is in consonance with the terms of appointment approved by the Members, at the time of their appointment. The NRC, reviews and recommends to the Board the changes in the managerial remuneration, generally being increment in basic salary and commission/incentive remuneration of the Managing and Executive Directors on a yearly basis. This review is based on the Balance Score Card that includes the performance of the Company and the individual director on certain defined qualitative and quantitative parameters such as volumes, EBITDA, cashflows, cost reduction initiatives, safety, strategic initiatives and special projects as decided by the Board vis-a-vis targets set in the beginning of the year. This review also takes into consideration the benchmark study undertaken by reputed independent agencies on comparative industry remuneration and practices. The variable portion of the CEO & Managing Directors remuneration comprises of incentive remuneration in the form of performance linked bonus and long-term incentive. The target performance linked bonus would be 550,000 per annum upto a maximum of 825,000 per annum. With the objective of achieving long-term value creation, through retention and continuity in leadership, a long term incentive plan is provided, with a value intended target of 550,000 per annum upto a maximum of 825,000 per annum. For the period from the date of joining upto March 31, 2017, the amount for the performance linked bonus and long-term incentive will be the target annual performance amount of 550,000 for each of the aforesaid 2 components, prorated for the actual period worked. The variable portion of the Executive Directors remuneration comprises a profit-linked commission and/or merit based incentive remuneration. The profit-linked commission is awarded at the discretion of the NRC and the Board of Directors, based on the net profits of the Company for that financial year, subject to the overall ceiling limits stipulated in Section 197 of the Act, but in any case not exceeding 400% of the basic salary. In case the Net Profits of the Company are inadequate for payment of profit-linked commission in any financial year, an incentive remuneration, not exceeding 200% of the basic salary, may be paid at the discretion of the Board. Given below are details pertaining to certain terms of appointment and payment of Managerial Remuneration to the CEO & Managing Director and Executive Directors for FY : nd Annual Report

8 Notice Board s Report Management Discussion & Analysis Corporate Governance Report Business Responsibility Report ` in lakhs Particulars Mr Guenter Butschek Mr Ravindra Pisharody Mr Satish Borwankar CEO & Managing Director Executive Director (Commercial Vehicles) Executive Director (Quality) Basic Salary Benefits, Perquisites & Allowance 1, (1) (2) Incentive Remuneration (3) Retirement Benefits Total Remuneration 2, Note: No Commission was paid to the Executive Directors for FY in view of inadequacy of profits. (1) Includes reimbursement of pension benefits of ` lakhs. (2) Includes leave encashment (3) Incentive remuneration shall be paid to the Directors after the forthcoming Annual General Meeting of the Company. Terms of Appointment Severance Notice Period and Fees CEO & Managing Director (MD) - The Contract with the CEO & MD may be terminated earlier, without any cause by either giving to the other party six months notice of such termination or the Company paying six months remuneration which shall be limited to provision of basic salary, benefits, perquisites and allowances (including Living Allowance) and any pro-rated incentive remuneration, in lieu of such notice. Additionally, in case of termination initiated by the Company before the end of the term for the reasons other than Tata Code of Conduct ( TCoC ), the MD shall be entitled to severance pay for a period of 12 months or balance term of the agreement whichever is less and which shall be limited to provision of basic salary, living allowance and any pro-rated incentive remuneration. - This appointment may not be terminated by the Company without notice or payment in lieu of notice except for reasons of breach of TCoC. In case of breach of TCoC, the CEO & MD shall not be entitled to Severance. - In the event the CEO & MD is not in a position to discharge his official duties due to any physical or mental incapacity, he shall be entitled to receive notice pay and the severance as mentioned above and this contract shall stand terminated. The Company does not have an Employee Stock Option Scheme for any of its employees or directors. Executive Directors - This appointment may be terminated by either party by giving to the other party six months notice of such termination or the Company paying six months remuneration in lieu of the Notice. - The employment of the Executive Director, may be terminated by the Company without notice or payment in lieu of notice: if the Executive Director, is found guilty of any gross negligence, default or misconduct in connection with or affecting the business of the Company or any subsidiary or associated company to which he is required by the Agreement to render services; or in the event of any serious repeated or continuing breach (after prior warning) or non-observance by the Executive Director, of any of the stipulations contained in the Agreement to be executed between the Company and the Executive Director; or in the event the Board expresses its loss of confidence in the Executive Director. - In the event the Executive Director is not in a position to discharge his official duties due to any physical or mental incapacity, the Board shall be entitled to terminate his contract on such terms as the Board may consider appropriate in the circumstances. 177

9 Retirement Policy for Directors The Company has adopted the Tata Group Governance Guidelines on Board Effectiveness, wherein the Managing and Executive Directors retire at the age of 65 years. The Executive Director, who have been retained on the Company s Board beyond the age of 65 years as Non- Executive Directors for special reasons may continue as Directors at the discretion of the Board but in no case beyond the age of 70 years. The Company has also adopted a Policy for Managing and Executive Directors, which has also been approved by the Members of the Company, offering special retirement benefits, including pension, exgratia and medical. In addition to the above, the retiring Managing Director (except where he is an expat) is entitled to residential accommodation or compensation in lieu of accommodation on retirement. The quantum and payment of the said benefits are subject to an eligibility criteria of the retiring director and is payable at the discretion of the Board in each individual case on the recommendation of the NRC. Section 149 of the Act provides that an Independent Director shall hold office for a term of upto 5 consecutive years on the Board of a Company and would not be liable to retire by rotation pursuant to Section 152 of the Act. An Independent Director would be eligible to be re-appointed for another 5 years on passing of a Special Resolution by the Company. However, no Independent Director shall hold office for more than 2 consecutive terms, but would be eligible for appointment after the expiration of 3 years of ceasing to become an Independent Director. Provided that, during the said period of 3 years, he/she is not appointed in or associated with the Company in any other capacity, either directly or indirectly. The retirement age for Independent Directors is 75 years as per the Governance Guidelines on Board Effectiveness. Accordingly, all Independent Directors have a tenure of 5 years each or upon attaining the retirement age of 75 years, whichever is earlier, as approved by the Members at the Annual General Meeting held on July 31, STAKEHOLDERS RELATIONSHIP COMMITTEE The Stakeholders Relationship Committee functions in accordance with Section 178 of the Act and Regulation 20 read with Part D of Schedule II of the SEBI Listing Regulations. The Committee comprising of 2 Independent Directors and the CEO & Managing Director, is empowered to: Review statutory compliances relating to all security holders. Consider and resolve the grievances of security holders of the Company, including complaints related to transfer of securities, non-receipt of annual report/ declared dividends/ notices/ balance sheet. Oversee and review all matters related to the transfer of securities of the Company. Approve issue of duplicate certificates of the Company. Review movements in shareholding and ownership structures of the Company. Ensure setting of proper controls and oversee performance of the Registrar and Share Transfer Agent. Recommend measures for overall improvement of the quality of investor services. During the year under review, 2 Committee meetings were held on August 9, 2016 and January 13, The composition of the Stakeholders Relationship Committee and attendance at its meetings is as follows: Composition Meetings attended Attendance (%) Mr V K Jairath (Chairman) Ms Falguni Nayar - 0 Mr Guenter Butschek Compliance Officer Mr H K Sethna, Company Secretary, who is the Compliance Officer, can be contacted at: Tata Motors Limited, Bombay House, 24, Homi Mody Street, Mumbai , India. Tel: , ; Fax: ; inv_rel@tatamotors.com. Complaints or queries relating to the shares and/or debentures can be forwarded to the Company s Registrar and Transfer Agents M/s TSR Darashaw Limited at csg-unit@tsrdarashaw.com, whereas complaints or queries relating to the public fixed deposits can be forwarded to the Registrars to the Fixed Deposits Scheme M/s TSR Darashaw Limited at tmlfd@tsrdarashaw.com. Complaints or queries relating to the Rights Issue launched by the Company vide Letter of Offer dated March 30, 2015 of Ordinary and A Ordinary Shares, can be forwarded to Link Intime India Private Limited, the Registrar to the Issue, for addressing any pre and post- Issue related queries / complaints including those relating to the Applications Supported by Blocked Amount (ASBA) process. Tel: (91 22) / /97; Fax: (91 22) ; Website: tatamotors.rights@linkintime.co.in; Contact Person: Mr Sachin Achar. The status on the total number of investors complaints during FY is as follows: Oversee compliances in respect of dividend payments and transfer of unclaimed amounts to the Investor Education and Protection Fund nd Annual Report

10 Notice Board s Report Management Discussion & Analysis Corporate Governance Report Business Responsibility Report Type Nos. Complaints regarding non-receipt of dividend, shares 71 lodged for transfer Complaints received from the shareholders through 49 SEBI and other statutory bodies and resolved Complaints redressed out of the above 112 Pending complaints as on * Other queries received from shareholders and replied 7,787 * The SEBI complaints have been replied to within 4 days but the same has been reflected as unresolved as at March 31, 2017, as per the condition for complete resolution defined by SEBI. All letters received from the investors are replied to and the response time for attending to investors correspondence during FY is shown in the following table: Number % Total number of correspondence received 7, during FY Replied within 1 to 4 days of receipt 3, Replied within 5 to 7 days of receipt 1, Replied within 8 to 15 days of receipt 1, Replied after 15 days of receipt (1) Received in last week of March 2017 have been replied in April (1) These correspondence pertained to court cases which involved retrieval of case files, cases involving retrieval of very old records, co-ordination with the Company/Advocates etc, partial documents awaited from the Investors, cases involving registration of legal documents, executed documents received for issue of duplicate certificates and transmission of shares without legal representation which involved checking of the documents, sending notices to Stock Exchange and issue of duplicate certificates/transmission of shares after approval from the Company. However, all these cases have been attended to within the statutory limit of 30 days. There were no pending share transfers pertaining to the Financial Year ended March 31, Out of the total number of complaints mentioned above, 49 complaints pertained to letters received through Statutory/Regulatory bodies and those related to the Court/ Consumer forum matters, fraudulent encashment and non-receipt of dividend. On recommendations of the Stakeholders Relationship Committee, the Company has taken various investor friendly initiatives like organising Shareholders visit to Company s Works at Pune, sending reminders to investors who have not claimed their dues, sending nomination forms etc. OTHER COMMITTEES The Executive Committee of the Board reviews capital and revenue budgets, long-term business strategies and plans, the organizational structure of the Company, real estate and investment transactions, allotment of shares and/or debentures, borrowing and other routine matters. The Committee also discusses the matters pertaining to legal cases, acquisitions and divestment, new business forays and donations. During the year under review, 1 Committee meeting was held on September 16, The Executive Committee of Board presently comprises of 1 Independent Director, 1 Non- Executive Director and 3 Whole-time Directors. The composition of the Executive Committee of Board and attendance at its meetings is given hereunder: Composition Meetings attended Attendance (%) Mr Cyrus Mistry (1) Mr N Chandrasekaran - NA (Chariman) (2) Mr N N Wadia (3) - 0 Mr N Munjee - 0 Mr S Bhargava (4) Mr R Pisharody Mr S B Borwankar Mr Guenter Butschek Resigned as the Non-Executive Chairman and Director of the Company with effect from December 19, Appointed as an Additional Director and Non-Executive Chairman of the Company with effect from January 17, Removed as an Independent Director by the Shareholders at the Extraordinary General Meeting of the Company held on December 22, The meeting was attended via audio conference. 4. Retired in accordance with the Company s Governance Guidelines on Board Effectiveness on March 29, 2017, upon attaining the age of 75 years. The Safety, Health and Environment (SHE) Committee was constituted with the objective of reviewing Safety, Health and Environment practices. The terms of reference of the Committee include the following: to take a holistic approach to safety, health and environmental matters in decision making; to provide direction to Tata Motors Group in carrying out its safety, health and environment function; to frame broad guidelines/policies with regard to safety, health and environment; to oversee the implementation of these guidelines/policies; and to review the policies, processes and systems periodically and recommend measures for improvement from time to time. The Committee comprises of 2 Independent Directors including the Chairman of the Committee and 3 Whole-time Directors viz Dr R A Mashelkar (Chairman), Mr V K Jairath, Mr Ravindra Pisharody, Mr S B Borwankar and Mr Guenter Butschek. During the year under review, two meetings of the Committee were held on May 27, 2016 and October 4, 2016, wherein all the members were present at the said meetings. 179

11 Corporate Social Responsibility (CSR) Committee was constituted by the Board in accordance with the Act to: (a) (b) (c) Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Act; Recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and Monitor the Corporate Social Responsibility Policy of the Company from time to time. The CSR Policy is uploaded on the Company s website as required under the provisions of Section 135 of the Act and Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules, The CSR committee comprises of 2 Independent Directors and 2 Whole-time Directors. During the year under review, 3 meetings of the Committee were held on May 27, 2016, October 4, 2016 and March 30, 2017.The composition of the CSR Committee and attendance at its meetings is given hereunder: Composition Meetings attended Attendance (%) Dr R A Mashelkar (Chairman) Ms Falguni Nayar Mr S B Borwankar Mr Guenter Butschek Risk Management Committee (RMC) is constituted and functions as per Regulation 21 of the SEBI Listing Regulations. The Committee comprises 4 Independent Directors namely, Mr Nasser Munjee, as Chairman, Dr Mashelkar, Mr V K Jairath and Ms Falguni Nayar as members. The terms of reference enumerated in the Committee Charter are as follows: Principles and objectives inter alia include assisting the Board in overseeing the Company s risk management process and controls, risk tolerance, capital liquidity and funding etc. and its periodic update to the Board. Committee shall act and have powers in accordance with the terms of reference specified in writing by the Board and shall be responsible for reviewing the Company s risk governance structure, assessment, practice, guidelines etc. The Committee will report to the Board periodically on various matters and shall undergo an annual self-evaluation of its performance and report the results thereof to the Board. During the year under review 5 meetings of the Committee were held on April 4, 2016, July 8, 2016, October 4, 2016, December 5, 2016 and January 12, The composition of the RMC and attendance at its meeting is given hereunder: Composition Meetings attended Attendance (%) Mr N Munjee Dr R A Mashelkar 3 60 Mr V K Jairath Ms Falguni Nayar Apart from the above, the Board of Directors also constitutes Committee(s) of Directors and/or Executives with specific terms of reference, as it deems fit. CODE OF CONDUCT Whilst the Tata Code of Conduct is applicable to all Whole-time Directors and employees of the Company, the Board has also adopted a Tata Code of Conduct for Non-Executive Directors and Independent Directors. Pursuant to Regulation 26(5) of the SEBI Listing Regulations, all members of senior management have confirmed that there are no material, financial and commercial transactions wherein they have a personal interest that may have a potential conflict with the interest of the Company at large. Pursuant to Regulation 26(3) of the SEBI Listing Regulations, all the Board members and senior management of the Company as on March 31, 2017 have affirmed compliance with their respective Codes of Conduct. A Declaration to this effect, duly signed by the CEO and Managing Director is annexed hereto. GENERAL BODY MEETINGS Annual General Meeting (AGM) Date of AGM August 9, 2016 August 13, 2015 July 31, 2014 Year Special Resolutions passed Venue and Time Appointment of Mr Guenter Butschek as the Chief Executive Officer and Managing Director Re-appointment of Mr Ravindra Pisharody Executive Director (Commercial Vehicles) and payment of remuneration Re-appointment of Mr Satish Borwankar Executive Director (Quality) and payment of remuneration Offer or invite for Subscription of Non-Convertible Debentures on private placement basis Offer or invite for Subscription of Non-Convertible Debentures on private placement basis Invitation and acceptance of Fixed Deposits from the Members and Public Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai at 3:00 p.m nd Annual Report